A Closer Look at the Smithfield Deal

The Center for Investigative Reporting takes a look at the Chinese purchase of Smithfield Foods, and investigates whether the company that bought Smithfield is controlled by the Chinese Government.  I find that focus to be misguided, but there are some very interesting numbers in the article:

The Virginia-based pork company derived its ham from a curing process Native Americans taught settlers five centuries ago. It owned part of Main Street in the bucolic town of Smithfield – including a restaurant, a historic Southern hotel and the company’s nearby headquarters.
C. Larry Pope, its president and CEO, had a fireplace in his sprawling executive office, which looked more like a hunting lodge than the command center for what had become America’s largest pork business.
But in 2013, a Chinese firm bought this quintessential slice of Americana – Main Street and all. The takeover, valued at $7.1 billion, remains the largest-ever Chinese acquisition of an American company...
With the Smithfield purchase, a Chinese company now owns 1 in 4 pigs raised in the U.S....
Pope had moved into the role of chief executive at Smithfield Foods seven years prior, taking the reins from the grandson of the company’s founder. He oversaw the company’s operations, including 46,000 worldwide employees, a research lab that had genetically engineered the leanest pigs on earth and nine slaughterhouses, including the world’s largest in North Carolina.
The company processed 32 million pigs a year. On average, one pig moved through a Smithfield Foods processing plant every second to be slaughtered, butchered, packaged and shipped for consumption. Bacon, ribs and other pork cuts made Smithfield a multibillion-dollar company.
Smithfield supplied restaurant chains such as McDonald’s and Denny’s and many grocery stores in the United States. It represented the height of America’s industrialized farming, owning everything from hog farms in Iowa to slaughterhouses outside Chicago and warehouses and distribution trucks that crisscrossed the United States, Canada and Europe....
In 2011, the year the five-year plan was announced, Chinese nationals owned $81 million worth of U.S. farmland.
By the end of 2012, the Chinese owned $900 million in U.S. farmland – a 1,000 percent increase – making them the largest buyers that year, according to the U.S. Department of Agriculture.
The Smithfield deal included another $480 million in U.S. farmland, which would push the Chinese stake to nearly $1.4 billion in less than two years....
Pope explained that the deal would create jobs in the U.S., not destroy them. Shuanghui’s plan to import more American pork would ramp up production at Smithfield’s 460 hog farms, creating more money for farmers and more jobs at the slaughterhouses.

All of the numbers describing Smithfield's operations amaze me.  460 farms.  32 million pigs a year. $480 million in farmland.  But probably most amazing is that the Chinese bought 1/4 of the entire U.S. pork industry for $7.1 billion, which was 30% above the market value of the company at the time.  Even at the 30% premium, that would indicate that all the hog raising facilities and all the hog processing facilities, along with all the hogs in the United States are worth less than $30 billion.  That's less than a third of what is spent on highways annually, and the transportation network is grossly underfunded.  $30 billion is pocket change in the U.S. economy.  That seems like a pretty low number to me.